Why Are We Having So Many Costly Disasters?

"The sea level has already risen on the East Coast in the last century, and it's expected it will continue to rise," Linkin says. "I think insurers have to be aware their risk landscape is going to change."

Computer simulations of climate change suggest that dry areas will get less rain, and wet areas will get more, Linkin says. That will lead to more flooding in some parts of the country and more droughts in others. The drought that created ripe conditions for wildfires in the West this year was the worst since the Dust Bowl, Linkin says. But such droughts could become more common -- more like 1-in-20 or 1-in-10 year events, versus 1-in-75 or 1-in-100 year events.

Complexity increases risk

The growing complexity of how businesses operate has also changed the risk of losses. A disaster not only affects the businesses it hits directly, but the many businesses in other locations that depend on them for supplies. And because we are so dependent on technology, damage to computer systems and robotics wreaks havoc.

Insurers have to look at risk differently, says Andrew Castaldi, Swiss Re's senior vice president and head of catastrophe perils in North America. They must consider all the connections to an industry hit by disaster.

What can we do?

The federal government already gives money to states and local communities to prepare for disasters and mitigate hazards. The grants pay for a variety of projects, such as efforts to elevate buildings in flood-prone areas and stabilize soils to prevent landslides.

Research shows those efforts pay off, says Kathleen Tierney, director of the Natural Hazards Center at the University of Colorado at Boulder. But better planning and mitigation are needed to reduce losses.